The Autumn Budget 2024: What It Means For EV Salary Sacrifice

The Chancellor of the Exchequer, Rt Hon Rachel Reeves delivered Labour’s first Autumn Budget alongside the latest economic forecast yesterday. In the lead-up to this announcement, Prime Minister, Keir Starmer, warned that the budget would be “painful” for many, asking the country to “accept short-term pain for long-term good.”

We have compiled everything you need to know from an EV salary sacrifice point of view.

EV Salary Sacrifice Schemes Are Here To Stay!

Rachel Reeves made it very clear in the Autumn Budget that Labour 'wants to support the uptake of electric vehicles' and therefore will continue to incentivise EV adoption until 2030 at least.

This means salary sacrifice remains the best and most affordable way to get into an electric car, making now the ideal time for your employees to take action and switch to an EV.

Benefit-in-Kind Tax Has Been Extended To 2030

The Benefit-in-Kind (BiK) rate is used to calculate the tax charged for a company benefit. The BiK rate for electric cars is currently set very low at 2%, to incentivise the adoption of electric vehicles.

In the 2023 Autumn Statement, former Chancellor Jeremy Hunt announced that the BiK rate would remain at 2% until 2025. After that, it would increase by 1% each year until it reaches 5% in 2028. In yesterday’s announcement, Reeves confirmed that starting in 2029, the BiK rate would rise by 2 percentage points per year, reaching 9% in 2030.

This means that the tax savings available to you through The Electric Car Scheme will continue until at least 2030, making salary sacrifice the best option for getting an electric car now and in the future.

Increase In Employer National Insurance Contributions

Labour have repeated their manifesto pledge that they will not raise taxes on working people.?Reeves confirmed there will be no increase to basic, higher or additional rates of Income tax, National Insurance Contributions (NICs) or VAT.

Rachel Reeves has confirmed the new Labour government will increase Employer National Insurance (NI) by 1.2 percentage points from 13.8% to 15%, and the threshold at which businesses start paying Employer National Insurance on a worker’s earnings will be lowered from ￡9,100 to ￡5,000. This is in an attempt to plug the ￡22 billion ‘black hole’ in the UK’s finances.

Road Tax For EVs Confirmed

Beginning April 1, 2025, the government will adjust the First Year Road Tax Rates for new cars to encourage the purchase of zero-emission and electric vehicles. These changes will widen the rate differences between electric vehicles and hybrid/ICE (internal combustion engine) vehicles.

Here’s what was laid out in the Autumn Statement. These changes will come into effect from the 1st of April 2025.

• Zero-emission cars will pay the lowest first-year rate at ￡10 until 2029-30, after this, you will pay the standard rate, currently ￡190 (subject to 2025 update).
• Rates for cars emitting 1-50 g/km of CO2 including hybrid vehicles will increase to ￡110 for 2025-26,
• Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to ￡130 for 2025-26,
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26.

Investing ￡200 Million In Public Charge Point Infrastructure

In the Autumn Statement, Labour will invest over ￡200 million in 2025 and 2026 to accelerate EV chargepoint rollout. This will include funding to support local authorities to install on-street chargepoints across England. This has been designed to build on the UK’s existing charging network, which continues to grow rapidly with over 700,000 public charge points currently.

EV salary sacrifice is the most affordable way for employees to drive electric, offering an excellent benefit that boosts retention while supporting your company’s sustainability goals.

Through The Electric Car Scheme, employees can choose from a wide range of new and used electric cars and even include the costs of maintenance, servicing, and a home charger in their salary sacrifice - at no additional cost to the employer!

If you're interested in reading more about the Autumn Budget and what it means for you, you can visit our blog.